(23andMe CEO Anne Wojcicki.Brad Barket/Getty)

• 23andMe, a company known for its consumer genetics test, is also looking to develop new drugs.

• The company raised $250 million on Tuesday, and the funding will in part go toward drug development.

• While drug development and consumer genetics tests might seem like vastly different businesses, the link could be critical to finding new treatments for diseases.

23andMe is getting serious about drug development.

On Tuesday, 23andMe announced that it had raised $250 million valuing the company at a reported $1.5 billion, and said that that funding will in part go toward developing 23andMe-made therapeutics. It'll also help the company expand its user base and build up its research platform.

23andMe is best known for its genetics tests that tell you everything from how much Neanderthal DNA you have to potential health risks, so the idea that it might one day make a drug might seem a bit off-beat. After all, it's not common for a company to run what seems like two completely different businesses: a consumer DNA test company and a biotech.

But the strategy makes more sense when one considers what gets paid for in healthcare, according to Dr. Krishna Yeshwant, a GV general partner who leads the Life Sciences team. GV is an investor in 23andMe.

"I think it's just the way the industry's structured," he told Business Insider. "There is a lot of value in diagnostics, it's just in the way that the diagnostics industry is structured you don't get paid as much for the diagnostic, you get paid a lot for the therapeutic,""

For example, a cancer drug might come with a diagnostic test that helps determine if the drug is right for that patient. But the part that costs the most is the drug, not the test. "If what the market wants, if what pharma and partners want, is a therapeutic, then to some degree you can produce a lot of data, but ultimately somebody needs to do that translation," Yeshwant said.

That could be where 23andMe — which has amassed massive datasets through its DNA-testing business — fits in. 23andMe has already partnered with major pharmaceutical companies like Lundbeck and Pfizer, which hope to use 23andMe's data to develop their own drugs. And in 2015, 23andMe started getting into drug development on its own, hiring former Genentech executive Richard Scheller to lead the team. But there haven't been too many updates since then.

The idea is to use the genetic information 23andMe's gathered from users who consent to share their information and use that to build therapies. The people who opt into sharing their data (about 85% of users) are asked to answer survey questions about their health and habits. Those answers then feed research into links between genetics and certain conditions. If certain genes stand out, they could become targets that 23andMe goes after with a drug. Ideally, that drug could then be studied in clinical trials, possibly on people who participated in the initial research who have that condition.